Inflation

Near-term expectations for price growth fell in the latest consumer sentiment survey from the Federal Reserve Bank of New York, but remains above the central bank's target across all time horizons.

The latest consumer conditions study from the American Financial Services Association paints a less-than-rosy picture of how lenders expect the second half of the year to play out.

Yields fell across maturities by four to six basis points, with the yield on the two-year note reaching the lowest level since July 20 and the benchmark 10-year yield at 4.62%.

With worries that the Fed may not act quickly enough to tamp down inflation pushing 30-year yields to their highest level since 2007 in recent days, the cost of hedging against deeper losses is growing.

The property market has been held back in recent months by elevated borrowing costs, which had fallen below 6% in late February before the Middle East conflict boosted energy prices.

Some market participants are taking a 'hawkish hold' FOMC reading coming out of the July meeting, even as they adapt to a quieter intermeeting chairman.

Yields on Tuesday were higher by roughly two to four basis points across maturities, with the 10-year yield rising to touch its highest since late May at 4.64%.

The Labor Department report that US consumer prices in June saw the first monthly drop since 2020 was met with relief in financial markets.

Reports on US consumer and producer prices, showed more deceleration that economists had estimated. As a result, the outlook for Fed policy shifted from two quarter-point hikes by mid-2027 to include the possibility of just one hike.

Kevin Warsh made his first appearance before Congress as Fed chairman Tuesday and noted that policymakers have no tolerance for high inflation, reiterating a vow to tame price growth.

From Capital Group to Insight Investment, Natixis and Pacific Investment Management Co., the message is the same: The sweet spot is the "belly," or the five-year area of the Treasury curve.

Christopher Phelan, President Donald Trump's nominee to chair the Council of Economic Advisers, declined to directly answer questions about recent inflation data and the effects of tariffs on consumers during a Senate confirmation hearing Thursday.

The Bureau of Economic Analysis' personal consumption expenditures inflation report for May showed that inflation had risen 4.1%, meeting elevated expectations and casting further doubt on the prospects of near-term interest rate cuts from the Federal Reserve.

The Treasury chief also predicted that the US economy will accelerate "on a non-inflationary basis for the rest of the year."

Newly minted Federal Reserve Chair Kevin Warsh will host his inaugural press conference on Wednesday. Bankers will be paying close attention to what he says — and how he says it.

A retrospective paper on the former Federal Reserve chair's tenure offers takeaways that speak directly to his successor's policy agenda.

Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that she believes price growth is still heading toward the central bank's 2% target when factoring out one-time shocks such as tariffs and elevated oil prices.

US 10-year yields are poised to snap their longest streak of declines in six months, advancing one basis point to 4.49% due to waning optimism that a peace deal may soon be reached to the end the war between the US and Iran.

The Federal Reserve Board governor is the latest Fed official to embrace the prospect of tighter monetary policy in response to rapidly rising prices that have taken hold in recent years.

Warsh takes over at a tense moment for the economy and the central bank. Price pressures have reaccelerated in recent months, driven by the impact of war in the Middle East on energy supplies.